Critics bristle as Victorian gambling watchdog probe finds no evidence Crown exercised undue influence over inspectors

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An independent probe into Victoria’s under-fire gambling watchdog has recommended parliament ban junkets for overseas high rollers.

Over recent years, casino operator Crown has come under scrutiny from authorities and the media over its junket operations with cashed-up Asian gamblers.

These ‘high rollers’ were flown into Melbourne to play at the casino, but some had links to organised crime and posed serious risk of money laundering.

The junket operations have been central to the Crown Casino Royal Commission in Victoria, which is due to report this Friday on whether Crown should keep its licence.

The royal commission has not been tasked with examining the gambling watchdog, a government decision that has drawn criticism.

An independent report by prominent QC Ian Freckelton was commissioned following the Four Corners story Watchdog or Lapdog?, which investigated allegations that the Victorian Commission for Gambling and Liquor Regulation (VCGLR) had failed in its role of regulating Crown Melbourne.

Dr Freckelton found that internal practices for auditing the casino dropped off in 2013 and 2014.

Internal systems for conducting compliance were also inadequate, and there was a lack of proper process to share information with police.

The state government and VCGLR have been criticised for years for not scrutinising the casino properly and failing to detect money laundering risks.

Dr Freckelton’s report criticises the rules for the regulator, saying there was too much onus on Crown to provide probity over high rollers rather than the VCGLR — he noted there had been improvements since December 2020.

This corroborates assertions made in the Four Corners story, including relating to junket audits — one of the key concerns of the inspectors — which were reduced or ceased in 2013-14.

“It found internal control statements had been ‘significantly inadequate in relation to probity requirements’ for junket operators, junket players and premium players in the past and later were found to have ‘inhibited the potential for audit checklist tools used by VCGLR inspectors to accomplish regulatory objectives effectively,'” an ABC spokesperson said.

Five whistleblowers told Four Corners their concerns and suspicions about illegal activity at the casino were ignored by their superiors.

It alleged that Crown Casino was in effect running the regulator, but Mr Freckelton QC could not substantiate those allegations, specifically that an incident in which it was alleged a bag full of cash that was deposited was not properly scrutinised.

“There is no evidence that Crown Casino exercised undue influence and/or control over the activities of the VCGLR inspectors at the casino, such that in effect ‘Crown were running [the] office,’’ Dr Freckelton said.

He also said there was no evidence that the VCGLR instructed inspectors at Crown Casino that it was not their responsibility to act on criminal activity discovered at the casino.

“To a similar effect, there is no evidence that inspectors were actively blocked from looking at money laundering at Crown Casino by VCGLR management,’’ he said in his report.

Crown has admitted its bank accounts were used for money laundering.

“The question Four Corners looked into was: Did the VCGLR fail in its task of keeping Crown in check? The on-camera interviews included five former VCGLR gaming inspectors — industry insiders with decades of first-hand experience who spoke out publicly because of their concerns over how criminal activity was able to flourish under the nose of the regulator,’’ an ABC spokesperson said.

“The story did not allege the VCGLR, its management or employees were corrupt or broke the law.”

In his report, Dr Freckelton said there needed to be better processes for sharing information with police — he also recommended that more inspectors be rostered on to scrutinise the casino and said consideration should be given to setting up a dedicated gambling unit in Victoria police.

One of the whistleblowers, Peter McCormack, who was interviewed by the review, said Dr Freckelton’s report was disappointing.

“We have been betrayed by the inquiry,’’ he told the ABC.

“I think they’ve missed the point.”

Mr McCormack said their complaint was that the VCGLR failed to investigate issues raised. He said he was concerned inspectors’ diaries were not reviewed as part of the inquiry.

As part of his probe, Dr Freckelton said it was unfortunate that it took outside pressure for the full scale of the deficiencies of Crown’s probity over junket operators to come to light.

Crown’s relationship with junket operators forced a rethink of its licence to run a casino in Sydney and was subject of the Bergin inquiry. It has since banned junkets.

Mr Freckelton recommends further action.

“The inherent and inescapable vulnerabilities of the junket system have the consequence that gambling junkets in substance, as well as in name, need to be abolished by legislation,’’ he said.

In recent years, Crown was fined $1 million for breaching rules, the maximum possible penalty.

“An issue for the legislature is whether the maximum penalty for such infractions should be increased as the deterrence value of a maximum $1 million fine for a commercial operator the size of Crown is less than necessary,’’ he said.

VCGLR Chairman Ross Kennedy said he took comfort no evidence of wrongdoing or corruption was found.

“While it is pleasing that the investigation has confirmed the VCGLR’s integrity, there are references to historical shortcomings which have been addressed, and recommendations for further improvement which are welcomed, consistent with our reform program underway, and will be fully implemented,’’ Mr Kennedy said.

Steph Ryan, Victorian Nationals deputy leader and Shadow Minister for Gambling and Liquor Regulation, said the report was not conducted at arms length from government.

“It was set up by Daniel Andrews to distract from his refusal to allow the royal commission to look at the actions of the Premier, his ministers and the government,’’ Ms Ryan said.

“The timing of its release, two days before the royal commission is due to report, shows how desperate Labor is to media manage the public narrative about its interactions with Crown.”

The state is reforming the watchdog with a new Victorian Gambling and Casino Control Commission (VGCCC) to replace the current regulator, which includes a dedicated casino regulation division focused solely on holding Melbourne’s casino operator to account.

“We will consider the recommendations of Dr Freckelton, alongside the findings of the royal commission, as we finalise the design and establishment of the VGCCC,’’ a government spokesperson said.

By state political reporter Richard Willingham (Original ABC Article)

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